Gartner(IT) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (Unaudited) Gartner's unaudited condensed consolidated financial statements for Q1 2025 and 2024, covering balance sheets, operations, equity, cash flows, and notes Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (March 31, 2025 vs. December 31, 2024) | Item | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Assets | | | | | | Total current assets | $4,131,954 | $4,196,531 | $(64,577) | -1.54% | | Total Assets | $8,479,761 | $8,534,671 | $(54,910) | -0.64% | | Liabilities and Stockholders' Equity | | | | | | Total current liabilities | $3,791,695 | $3,969,016 | $(177,321) | -4.47% | | Total Liabilities | $6,981,907 | $7,175,502 | $(193,595) | -2.70% | | Total Stockholders' Equity | $1,497,854 | $1,359,169 | $138,685 | 10.20% | | Total Liabilities and Stockholders' Equity | $8,479,761 | $8,534,671 | $(54,910) | -0.64% | Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (Three Months Ended March 31, 2025 vs. 2024) | Item | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Total revenues | $1,534,130 | $1,472,926 | $61,204 | 4.16% | | Total costs and expenses | $1,256,098 | $1,199,041 | $57,057 | 4.76% | | Operating income | $278,032 | $273,885 | $4,147 | 1.51% | | Income before income taxes | $267,008 | $259,557 | $7,451 | 2.87% | | Provision for income taxes | $56,069 | $49,012 | $7,057 | 14.40% | | Net income | $210,939 | $210,545 | $394 | 0.19% | | Basic net income per share | $2.73 | $2.69 | $0.04 | 1.49% | | Diluted net income per share | $2.71 | $2.67 | $0.04 | 1.50% | Condensed Consolidated Statements of Comprehensive Income Condensed Consolidated Statements of Comprehensive Income (Three Months Ended March 31, 2025 vs. 2024) | Item | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Net income | $210,939 | $210,545 | $394 | 0.19% | | Other comprehensive income (loss), net of tax | $20,484 | $(6,055) | $26,539 | -438.30% | | Comprehensive income | $231,423 | $204,490 | $26,933 | 13.17% | Condensed Consolidated Statements of Changes in Stockholders' Equity Changes in Stockholders' Equity (Three Months Ended March 31, 2025 vs. 2024) | Item | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | | Balance at December 31 | $1,359,169 | $680,634 | | Net income | $210,939 | $210,545 | | Other comprehensive income (loss) | $20,484 | $(6,055) | | Issuances under stock plans | $9,766 | $8,072 | | Common share repurchases | $(152,672) | $(225,522) | | Stock-based compensation expense | $50,168 | $50,500 | | Balance at March 31 | $1,497,854 | $718,174 | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31, 2025 vs. 2024) | Item | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Cash provided by operating activities | $313,512 | $188,836 | $124,676 | 66.02% | | Cash used in investing activities | $(25,569) | $(24,660) | $(909) | 3.69% | | Cash used in financing activities | $(152,936) | $(219,681) | $66,745 | -30.38% | | Net increase (decrease) in cash and cash equivalents and restricted cash | $135,007 | $(55,505) | $190,512 | -343.24% | | Cash and cash equivalents, end of period | $2,091,048 | $1,236,401 | $854,647 | 69.12% | Notes to Condensed Consolidated Financial Statements Note 1 — Business and Basis of Presentation Gartner provides objective insight via Research, Conferences, and Consulting segments; interim financials follow U.S. GAAP, with recent ASUs impacting disclosures - Gartner, Inc. delivers actionable, objective insight through three business segments: Research, Conferences, and Consulting[19][20] - The Company adopted ASU 2023-07 (Segment Reporting) effective with the 2024 10-K, which only impacted disclosures and had no impact on results of operations, cash flows, or financial condition[29] - New accounting standards ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Income Statement-Expense Disaggregation) are expected to impact disclosures but not the Company's results of operations, cash flows, or financial condition in future periods[31][32] Note 2 — Goodwill and Intangible Assets Goodwill, representing excess purchase price, showed no impairment in Q3 2024; finite-lived intangibles are amortized straight-line - The Company's most recent annual impairment test of goodwill, a qualitative analysis conducted in Q3 2024, indicated no impairment[36] Goodwill by Segment (March 31, 2025 vs. December 31, 2024) | Segment | December 31, 2024 (in thousands) | Foreign Currency Translation Impact (in thousands) | March 31, 2025 (in thousands) | | :-------- | :------------------------------- | :--------------------------------- | :---------------------------- | | Research | $2,650,981 | $2,447 | $2,653,428 | | Conferences | $183,920 | $38 | $183,958 | | Consulting | $95,304 | $432 | $95,736 | | Total | $2,930,205 | $2,917 | $2,933,122 | Finite-Lived Intangible Assets (March 31, 2025 vs. December 31, 2024) | Item | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | | Gross cost | $1,082,382 | $1,082,117 | | Accumulated amortization | $(690,578) | $(672,428) | | Balance | $391,804 | $409,689 | | Amortization expense (Q1 2025) | $21,900 | $23,000 (Q1 2024) | Note 3 — Revenue and Related Matters Revenue disaggregated by geography and timing, mostly Research recognized over time; $6.1 billion in unsatisfied obligations, $2.9 billion due in 2025 Disaggregated Revenue by Primary Geographic Market (Three Months Ended March 31, 2025 vs. 2024) | Geographic Market | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | % Change | | :------------------ | :----------------------------- | :------------------------------- | :------- | | United States and Canada | $993,829 | $961,850 | 3.32% | | Europe, Middle East and Africa | $363,145 | $334,473 | 8.57% | | Other International | $177,156 | $176,603 | 0.31% | | Total revenues | $1,534,130 | $1,472,926 | 4.16% | Disaggregated Revenue by Timing of Recognition (Three Months Ended March 31, 2025 vs. 2024) | Timing of Revenue Recognition | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | % Change | | :---------------------------- | :----------------------------- | :------------------------------- | :------- | | Transferred over time | $1,356,740 | $1,290,855 | 5.10% | | Transferred at a point in time | $177,390 | $182,071 | -2.57% | | Total revenues | $1,534,130 | $1,472,926 | 4.16% | - Aggregate amount of transaction price allocated to unsatisfied performance obligations (contracts > 1 year) as of March 31, 2025 was approximately $6.1 billion. The Company expects to recognize $2.9 billion of this revenue during the remainder of 2025[48] Note 4 — Computation of Earnings Per Share Basic and diluted EPS calculations show a slight increase for Q1 2025 compared to the prior year Earnings Per Share (Three Months Ended March 31, 2025 vs. 2024) | Item | March 31, 2025 | March 31, 2024 | Change | % Change | | :--------------------------------- | :------------- | :------------- | :----- | :------- | | Net income used for calculating basic and diluted income per share (in thousands) | $210,939 | $210,545 | $394 | 0.19% | | Weighted average common shares (basic, in thousands) | 77,357 | 78,339 | (982) | -1.25% | | Shares used in diluted income per share (in thousands) | 77,790 | 78,964 | (1,174) | -1.49% | | Basic income per share | $2.73 | $2.69 | $0.04 | 1.49% | | Diluted income per share | $2.71 | $2.67 | $0.04 | 1.50% | Note 5 — Stock-Based Compensation Stock-based compensation for Q1 2025 was $50.2 million, a slight decrease from Q1 2024, primarily driven by restricted stock units Stock-Based Compensation Expense by Award Type (Three Months Ended March 31, 2025 vs. 2024) | Award Type | March 31, 2025 (in millions) | March 31, 2024 (in millions) | | :----------------------- | :---------------------------- | :---------------------------- | | Stock appreciation rights | $3.4 | $4.6 | | Restricted stock units | $46.6 | $45.6 | | Common stock equivalents | $0.2 | $0.3 | | Total | $50.2 | $50.5 | Stock-Based Compensation Expense by Expense Category (Three Months Ended March 31, 2025 vs. 2024) | Expense Category | March 31, 2025 (in millions) | March 31, 2024 (in millions) | | :----------------------- | :---------------------------- | :---------------------------- | | Cost of services and product development | $20.6 | $19.5 | | Selling, general and administrative | $29.6 | $31.0 | | Total | $50.2 | $50.5 | Note 6 — Segment Information Gartner operates Research, Conferences, and Consulting segments, with performance based on gross contribution margin; Q1 2025 revenues rose 4% to $1.53 billion Segment Revenues and Gross Contribution (Three Months Ended March 31, 2025 vs. 2024) | Segment | March 31, 2025 Revenues (in thousands) | March 31, 2024 Revenues (in thousands) | % Change Revenues | March 31, 2025 Gross Contribution (in thousands) | March 31, 2024 Gross Contribution (in thousands) | % Change Gross Contribution | | :---------- | :------------------------------------ | :------------------------------------ | :---------------- | :------------------------------------------ | :------------------------------------------ | :-------------------------- | | Research | $1,321,827 | $1,268,172 | 4.23% | $984,523 | $944,570 | 4.23% | | Conferences | $72,597 | $70,069 | 3.61% | $27,382 | $23,255 | 17.75% | | Consulting | $139,706 | $134,685 | 3.73% | $53,392 | $54,287 | -1.65% | | Consolidated | $1,534,130 | $1,472,926 | 4.16% | $1,065,297 | $1,022,112 | 4.22% | - Research segment provides actionable, objective insight, guidance, and tools to executives. Conferences segment offers learning, sharing, and networking opportunities. Consulting segment serves senior executives with custom analysis and on-the-ground support for technology-driven strategic initiatives[64] Note 7 — Debt Gartner's total outstanding debt was $2.48 billion as of March 31, 2025, primarily from a revolving facility and senior notes; a $350 million interest rate swap mitigates risk Total Outstanding Borrowings (March 31, 2025 vs. December 31, 2024) | Description | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | | 2024 Credit Agreement - Revolving facility | $274,400 | $274,400 | | 4.50% Senior Notes due 2028 | $800,000 | $800,000 | | 3.625% Senior Notes due 2029 | $600,000 | $600,000 | | 3.75% Senior Notes due 2030 | $800,000 | $800,000 | | Other | $5,000 | $5,000 | | Principal amount outstanding | $2,479,400 | $2,479,400 | | Net balance sheet carrying amount | $2,460,949 | $2,459,915 | - The Company had approximately $0.7 billion of available borrowing capacity on the 2024 Credit Agreement revolver as of March 31, 2025[67] - A fixed-for-floating interest rate swap contract with a notional value of $350.0 million matures in September 2025, effectively converting floating SOFR rates to a fixed base rate of 2.98%[83] Note 8 — Equity Gartner's share repurchase program has $0.9 billion remaining; 300,745 shares were repurchased for $162.7 million in Q1 2025, with AOCL improving from foreign currency adjustments - As of March 31, 2025, $0.9 billion remained available under the Company's share repurchase program[85] Share Repurchase Activity (Three Months Ended March 31, 2025 vs. 2024) | Item | March 31, 2025 | March 31, 2024 | | :--------------------------------- | :------------- | :------------- | | Number of shares repurchased | 300,745 | 489,734 | | Cash paid for repurchased shares (in thousands) | $162,672 | $225,124 | | Average purchase price per share | $507.65 | $459.69 | Changes in Accumulated Other Comprehensive Loss (AOCL) (Three Months Ended March 31, 2025 vs. 2024) | Component | Balance – Dec 31, 2024 (in thousands) | Change in AOCL before reclassifications (in thousands) | Reclassifications to income (in thousands) | Balance – Mar 31, 2025 (in thousands) | | :--------------------------------- | :------------------------------------ | :------------------------------------- | :--------------------------------- | :------------------------------------ | | Interest Rate Swaps | $(9,800) | $0 | $3,390 | $(6,410) | | Defined Benefit Pension Plans | $(5,214) | $0 | $48 | $(5,166) | | Foreign Currency Translation Adjustments | $(73,319) | $17,046 | $0 | $(56,273) | | Total | $(88,333) | $17,046 | $3,438 | $(67,849) | Note 9 — Income Taxes Income tax provision rose to $56.1 million in Q1 2025 (from $49.0 million), with an effective rate of 21.0% due to larger unrecognized tax benefits; OECD Pillar Two impact is not significant Income Tax Provision and Effective Rate (Three Months Ended March 31, 2025 vs. 2024) | Item | March 31, 2025 (in millions) | March 31, 2024 (in millions) | Change (in millions) | % Change | | :--------------------------------- | :---------------------------- | :---------------------------- | :------------------- | :------- | | Provision for income taxes | $56.1 | $49.0 | $7.1 | 14.49% | | Effective income tax rate | 21.0% | 18.9% | 2.1 pts | 11.11% | - The higher effective income tax rate in Q1 2025 is primarily due to larger unrecognized tax benefits compared to the prior year[94] - Gross unrecognized tax benefits were $267.2 million on March 31, 2025, up from $257.5 million on December 31, 2024[95] Note 10 — Derivatives and Hedging Gartner uses derivatives, including a $350.0 million interest rate swap and $142.7 million in foreign currency forwards, to mitigate cash flow risks; the interest rate swap is de-designated for hedge accounting Outstanding Derivative Contracts (March 31, 2025 vs. December 31, 2024) | Derivative Contract Type | March 31, 2025 Notional Amounts (in thousands) | March 31, 2025 Fair Value Asset (Liability), Net (in thousands) | December 31, 2024 Notional Amounts (in thousands) | December 31, 2024 Fair Value Asset (Liability), Net (in thousands) | | :----------------------- | :-------------------------------------------- | :------------------------------------------------------- | :-------------------------------------------- | :------------------------------------------------------- | | Interest rate swap | $350,000 | $2,077 | $350,000 | $3,095 | | Foreign currency forwards | $142,676 | $(14) | $656,904 | $(16) | | Total | $492,676 | $2,063 | $1,006,904 | $3,079 | - Effective June 30, 2020, the Company de-designated all interest rate swaps and discontinued hedge accounting. Subsequent changes to fair value are recorded in Other income, net[99] Derivative Contract Impact on Statements of Operations (Three Months Ended March 31, 2025 vs. 2024) | Amount recorded in: | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | | :------------------ | :----------------------------- | :------------------------------- | | Interest expense, net | $4,464 | $4,806 | | Other income, net | $(596) | $(4,314) | | Total expense, net | $3,868 | $492 | Note 11 — Fair Value Disclosures Financial instruments' carrying amounts approximate fair value; recurring measurements use Level 1 and 2 inputs, non-recurring for long-lived assets use Level 3 for impairment Fair Values of Financial Assets and Liabilities Measured on a Recurring Basis (March 31, 2025 vs. December 31, 2024) | Description | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | | Assets: | | | | Total Level 1 inputs (Deferred compensation plan assets) | $23,430 | $18,089 | | Total Level 2 inputs (Deferred compensation plan assets, FX forwards, Interest rate swap) | $134,703 | $133,617 | | Total Assets | $158,133 | $151,706 | | Liabilities: | | | | Total Level 2 inputs (Deferred compensation plan liabilities, FX forwards) | $150,077 | $150,432 | | Total Liabilities | $150,077 | $150,432 | Carrying Amounts and Fair Values of Financial Instruments Not Recorded at Fair Value (March 31, 2025 vs. December 31, 2024) | Description | March 31, 2025 Carrying Amount (in thousands) | December 31, 2024 Carrying Amount (in thousands) | March 31, 2025 Fair Value (in thousands) | December 31, 2024 Fair Value (in thousands) | | :--------------------------------- | :------------------------------------ | :------------------------------------ | :-------------------------------- | :-------------------------------- | | 2028 Notes | $795,607 | $795,296 | $786,648 | $780,544 | | 2029 Notes | $595,893 | $595,669 | $566,628 | $558,840 | | 2030 Notes | $794,319 | $794,089 | $740,152 | $732,200 | | Total | $2,185,819 | $2,185,054 | $2,093,428 | $2,071,584 | - The Company recorded an impairment loss of $0.5 million in Q1 2024 on right-of-use assets and other long-lived assets, primarily related to office leases no longer in use. Fair values were estimated using discounted cash flow models (Level 3 inputs)[109] Note 12 — Contingencies Gartner is involved in routine legal proceedings, with provisions recorded for probable and estimable unfavorable outcomes; potential liabilities beyond accrued amounts are not expected to be material - The Company believes that potential liability from legal proceedings, claims, and compliance matters, in excess of amounts already accrued, will not have a material effect on its financial position, cash flows, or results of operations[110] - Historically, payments made by the Company under indemnification agreements have not been material, and as of March 31, 2025, there were no material payment obligations[111] Note 13 — Leases Gartner's net lease cost for Q1 2025 was $18.6 million, down from Q1 2024; an impairment loss of $0.5 million was recognized in Q1 2024 due to office space changes Net Lease Cost and Related Information (Three Months Ended March 31, 2025 vs. 2024) | Description | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | | Operating lease cost | $24,348 | $25,903 | | Lease cost | $5,685 | $5,631 | | Sublease income | $(11,386) | $(11,882) | | Total lease cost, net | $18,647 | $19,652 | | Cash paid for operating lease liabilities | $28,657 | $34,049 | | Cash receipts from sublease arrangements | $11,144 | $11,110 | | Right-of-use assets obtained | $5,071 | $6,791 | - The Company recognized an impairment loss of $0.5 million during the three months ended March 31, 2024, related to right-of-use assets ($0.4 million) and other long-lived assets ($0.1 million), due to changes in office space utilization[119] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses Gartner's Q1 2025 financial condition, operations, and cash flows, highlighting 4% revenue growth to $1.5 billion, stable net income, increased operating cash flow, and key developments - Gartner's strategy focuses on creating actionable insight, delivering innovative products, building strong sales capabilities, providing world-class client service, and continuously improving operational effectiveness[132] - US federal government Research contract value decreased from approximately $275.0 million at December 31, 2024, to $225.0 million at March 31, 2025, with less than half of eligible renewals retained and $30.0 million in termination-for-convenience notices[128] Key Financial Highlights (Three Months Ended March 31, 2025 vs. 2024) | Item | March 31, 2025 (in millions) | March 31, 2024 (in millions) | Change (in millions) | % Change | | :--------------------------------- | :---------------------------- | :---------------------------- | :------------------- | :------- | | Total revenues | $1,534.1 | $1,472.9 | $61.2 | 4.16% | | Net income | $210.9 | $210.5 | $0.4 | 0.19% | | Diluted net income per share | $2.71 | $2.67 | $0.04 | 1.50% | | Cash provided by operating activities | $313.5 | $188.8 | $124.7 | 66.02% | FORWARD-LOOKING STATEMENTS Forward-looking statements are subject to risks from global economic and geopolitical conditions, strategic execution, competition, and AI developments; actual results may differ - Forward-looking statements are subject to risks including global economic and geopolitical conditions (inflation, recession, Middle East conflict, Ukraine war), strategic execution, ability to manage growth and acquisitions, debt obligations, customer retention, competition, intellectual property rights, AI technological developments and regulations, international operations (foreign currency fluctuations), and tax policy changes[124] BUSINESS OVERVIEW Gartner provides objective insight via Research, Conferences, and Consulting segments; employee count rose 4.0% to 21,107, but US federal government Research contract value declined - As of March 31, 2025, Gartner had 21,107 employees globally, an increase of 4.0% from March 31, 2024[127] - Research contract value with the US federal government was approximately $225.0 million at March 31, 2025, down from $275.0 million at December 31, 2024. Less than half of eligible Q1 2025 renewals were retained, and $30.0 million in termination-for-convenience notices were received[128] BUSINESS MEASUREMENTS Gartner tracks segment performance using key metrics: Research (contract value, retention rates), Conferences (number of events, attendees), and Consulting (backlog, utilization rate) - Research segment performance is measured by Contract value (annualized value of subscription contracts), Client retention rate (percentage of clients retained year-over-year), and Wallet retention rate (contract value retained with clients over 12 months, excluding foreign currency impact)[131] - Conferences segment performance is measured by the Number of destination conferences and Number of destination conferences attendees[131] - Consulting segment performance is measured by Consulting backlog (future revenue from in-process engagements) and Utilization rate (productivity of consultants)[131] EXECUTIVE SUMMARY OF OPERATIONS AND FINANCIAL POSITION Gartner's Q1 2025 revenues rose 4% to $1.5 billion, net income was $210.9 million, diluted EPS $2.71, and operating cash flow increased to $0.3 billion, maintaining strong liquidity - Total revenues for Q1 2025 were $1.5 billion, a 4% increase compared to Q1 2024, with Research, Conferences, and Consulting each increasing by 4%[133] - Net income for Q1 2025 was $210.9 million (Q1 2024: $210.5 million), and diluted net income per share was $2.71 (Q1 2024: $2.67)[134] - Cash provided by operating activities was $0.3 billion in Q1 2025, up from $0.2 billion in Q1 2024. The Company had $2.1 billion in cash and cash equivalents and approximately $0.7 billion in available borrowing capacity[134] CRITICAL ACCOUNTING POLICIES AND ESTIMATES No material changes occurred to critical accounting policies and estimates since the Company's 2024 Annual Report on Form 10-K - No material changes to critical accounting policies and estimates since the 2024 Form 10-K[135] RECENTLY ISSUED ACCOUNTING STANDARDS Information on recently issued accounting standards not yet effective is detailed in Note 1 — Business and Basis of Presentation - Details on recently issued accounting standards not yet effective are provided in Note 1 — Business and Basis of Presentation[136] RESULTS OF OPERATIONS Total revenues increased 4% (6% foreign currency neutral) in Q1 2025; operating income rose 2%, interest expense decreased 30%, and the effective tax rate increased to 21.0% Consolidated Results of Operations (Three Months Ended March 31, 2025 vs. 2024) | Item | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | Increase (Decrease) (in thousands) | % Increase (Decrease) | | :--------------------------------- | :----------------------------- | :------------------------------- | :--------------------------------- | :-------------------- | | Total revenues | $1,534,130 | $1,472,926 | $61,204 | 4% | | Cost of services and product development | $475,030 | $459,441 | $15,589 | 3% | | Selling, general and administrative | $730,308 | $689,833 | $40,475 | 6% | | Depreciation | $28,866 | $26,317 | $2,549 | 10% | | Amortization of intangibles | $21,894 | $22,990 | $(1,096) | (5)% | | Acquisition and integration charges | $0 | $460 | $(460) | (100)% | | Operating income | $278,032 | $273,885 | $4,147 | 2% | | Interest expense, net | $(13,413) | $(19,219) | $(5,806) | (30)% | | Other income, net | $2,389 | $4,891 | $(2,502) | (51)% | | Provision for income taxes | $56,069 | $49,012 | $7,057 | 14% | | Net income | $210,939 | $210,545 | $394 | —% | - Total revenues increased by 4% on a reported basis and 6% excluding foreign currency impact[139] - Selling, general and administrative (SG&A) expense increased by 6% (7% foreign currency neutral), primarily due to a $40.8 million increase in personnel expenses from increased headcount. Quota-bearing sales associates increased by 4% combined[141] SEGMENT RESULTS Research revenues rose 4% (6% FC neutral) with 7% contract value growth; Conferences grew 4% (5% FC neutral) from exhibitor revenue; Consulting revenues increased 4% (5% FC neutral) from contract optimization, but gross contribution margin decreased - Segment performance is evaluated based on gross contribution margin, defined as operating income or loss excluding certain Cost of services and product development expenses, SG&A expenses, Depreciation, Amortization of intangibles, Acquisition and integration charges and Gain from sale of divested operation[149] Research Research Segment Performance (Three Months Ended March 31, 2025 vs. 2024) | Item | March 31, 2025 | March 31, 2024 | Increase (Decrease) | % Increase (Decrease) | | :--------------------------------- | :------------- | :------------- | :------------------ | :-------------------- | | Revenues (in thousands) | $1,321,827 | $1,268,172 | $53,655 | 4% | | Gross contribution (in thousands) | $984,523 | $944,570 | $39,953 | 4% | | Gross contribution margin | 74% | 74% | — | — | | Contract Value (in thousands, FC neutral) | $5,051,000 | $4,732,000 | $319,000 | 7% | | Global Technology Sales (GTS) Contract value (in thousands, FC neutral) | $3,853,000 | $3,650,000 | $203,000 | 6% | | GTS Client retention | 84% | 83% | 1 point | — | | GTS Wallet retention | 101% | 101% | — | — | | Global Business Sales (GBS) Contract value (in thousands, FC neutral) | $1,198,000 | $1,082,000 | $116,000 | 11% | | GBS Client retention | 87% | 87% | — | — | | GBS Wallet retention | 105% | 107% | (2) points | — | - Research revenues increased by 4% (6% excluding foreign currency impact) primarily due to contract value growth in 2024[153] - Contract value increased to $5.1 billion (7% year-over-year, foreign currency neutral), with high single-digit growth in most industry sectors, led by energy, manufacturing, and healthcare. Public sector lagged in low single digits[154] Conferences Conferences Segment Performance (Three Months Ended March 31, 2025 vs. 2024) | Item | March 31, 2025 | March 31, 2024 | Increase (Decrease) | % Increase (Decrease) | | :--------------------------------- | :------------- | :------------- | :------------------ | :-------------------- | | Revenues (in thousands) | $72,597 | $70,069 | $2,528 | 4% | | Gross contribution (in thousands) | $27,382 | $23,255 | $4,127 | 18% | | Gross contribution margin | 38% | 33% | 5 points | — | | Number of destination conferences | 10 | 12 | (2) | (17)% | | Number of destination conferences attendees | 11,911 | 13,857 | (1,946) | (14)% | - Conferences revenues increased by 4% (5% excluding foreign currency impact) primarily due to increased exhibitor revenue, despite holding fewer in-person destination conferences (10 in Q1 2025 vs. 12 in Q1 2024)[159] - Gross contribution increased by 18% due to higher revenues and a decrease in conference-related expenses, as two destination conferences moved from Q1 to Q2 2025[159] Consulting Consulting Segment Performance (Three Months Ended March 31, 2025 vs. 2024) | Item | March 31, 2025 | March 31, 2024 | Increase (Decrease) | % Increase (Decrease) | | :--------------------------------- | :------------- | :------------- | :------------------ | :-------------------- | | Revenues (in thousands) | $139,706 | $134,685 | $5,021 | 4% | | Gross contribution (in thousands) | $53,392 | $54,287 | $(895) | (2)% | | Gross contribution margin | 38% | 40% | (2) points | — | | Backlog (in thousands, FC neutral) | $213,500 | $183,700 | $29,800 | 16% | | Billable headcount | 968 | 948 | 20 | 2% | | Consultant utilization | 64% | 66% | (2) points | — | - Consulting revenues increased by 4% (5% excluding foreign currency impact), driven by a 36% increase in contract optimization revenue, partially offset by a 4% decrease in labor-based consulting revenue[163] - Gross contribution margin decreased by 2 points to 38%, primarily due to an increase in personnel expenses from higher headcount[163] - Backlog increased by $29.8 million, or 16%, from March 31, 2024, to March 31, 2025, excluding foreign currency impact[164] LIQUIDITY AND CAPITAL RESOURCES Gartner maintains strong liquidity with $2.1 billion in cash and $0.7 billion in available credit; operating cash flow increased significantly by $124.7 million to $313.5 million due to improved collections - As of March 31, 2025, the Company had $2.1 billion of cash and cash equivalents and approximately $0.7 billion of available borrowing capacity on its revolving credit facility[166] Changes in Cash Balances (Three Months Ended March 31, 2025 vs. 2024) | Item | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | Increase (Decrease) (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | :--------------------------------- | | Cash provided by operating activities | $313,512 | $188,836 | $124,676 | | Cash used in investing activities | $(25,569) | $(24,660) | $(909) | | Cash used in financing activities | $(152,936) | $(219,681) | $66,745 | | Net increase (decrease) in cash and cash equivalents and restricted cash | $135,007 | $(55,505) | $190,512 | | Ending cash and cash equivalents | $2,091,048 | $1,236,401 | $854,647 | - Cash provided by operating activities increased by $124.7 million year-over-year, primarily due to improved timing of collections[172] - Cash used in financing activities included $162.7 million for share repurchases in Q1 2025 (vs. $225.1 million in Q1 2024)[174] OFF BALANCE SHEET ARRANGEMENTS No material off-balance sheet arrangements or transactions with unconsolidated entities were entered into during Q1 2025 - No material off-balance sheet arrangements or transactions with unconsolidated entities or other persons were entered into during Q1 2025[177] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Gartner faces interest rate, foreign currency, and credit risks; interest rate risk is mitigated by swaps, foreign currency risk by forwards, and credit risk is limited by investment-grade counterparties and diverse customers - Approximately $274.4 million of the Company's total debt outstanding as of March 31, 2025, was based on a floating base rate of interest, with an interest rate swap contract effectively converting these to fixed rates[179] - A 10% change in foreign currency exchange rates could increase or decrease cash and cash equivalents by approximately $79.9 million as of March 31, 2025[181] - Credit risk is limited due to the majority of cash, cash equivalents, interest rate swap contracts, and foreign currency forward exchange contracts being with large investment-grade commercial banks, and a diverse customer base for fees receivable[183] INTEREST RATE RISK - As of March 31, 2025, Gartner had $2.5 billion in total debt principal outstanding, with $274.4 million based on a floating interest rate[178][179] - The Company uses an interest rate swap contract to effectively convert floating interest rates on variable rate borrowings to fixed rates, reducing exposure to interest rate increases[179] FOREIGN CURRENCY RISK - Gartner is exposed to foreign currency translation and transaction risk due to significant revenues from sales outside the U.S. in major currencies like the Euro, British Pound, Japanese Yen, Australian dollar, and Canadian dollar[180] - A 10% fluctuation in foreign currency exchange rates could impact the reported cash and cash equivalents by approximately $79.9 million[181] - Short-term foreign currency forward exchange contracts are used to mitigate cash flow risk from changes in foreign currency rates on forecasted transactions[182] CREDIT RISK - Concentration of credit risk is primarily in cash equivalents, fees receivable, interest rate swap contracts, and foreign currency forward exchange contracts[183] - The majority of these financial instruments are held with large investment-grade commercial banks, and fees receivable have limited concentration due to a diverse customer base[183] ITEM 4. CONTROLS AND PROCEDURES Management concluded Gartner's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting identified during the quarter - As of March 31, 2025, the Company's disclosure controls and procedures were effective[185] - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2025[186] PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Gartner is involved in ordinary legal proceedings, and potential liabilities beyond accrued amounts are not expected to materially affect its financial position or results - The Company believes that potential liability from legal proceedings, claims, and litigation, in excess of amounts already accrued, will not have a material effect on its financial position, cash flows, or results of operations[188] ITEM 1A. RISK FACTORS No material changes occurred to the risk factors disclosed in the Company's 2024 Annual Report on Form 10-K - No material changes to the risk factors disclosed in the 2024 Form 10-K[189] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS No unregistered equity sales occurred; 300,745 shares were repurchased for $162.7 million in Q1 2025, with $873.9 million remaining under the repurchase program - No unregistered sales of equity securities occurred during the period[190] Issuer Purchases of Equity Securities (Three Months Ended March 31, 2025) | Period | Total Number of Shares Purchased () | Average Price Paid Per Share ($) | Total Number of Shares Purchased Under Announced Programs () | Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in thousands) | | :--------------------------------- | :----------------------------------- | :------------------------------- | :---------------------------------------------------------- | :---------------------------------------------------------------------------------------------------------- | | January 1, 2025 to January 31, 2025 | 163,247 | $490.13 | 163,201 | $873,855 | | February 1, 2025 to February 28, 2025 | 137,229 | $528.54 | — | $873,855 | | March 1, 2025 to March 31, 2025 | 269 | $477.73 | — | $873,855 | | Total for the quarter | 300,745 | $507.65 | 163,201 | | ITEM 5. OTHER INFORMATION No director or Section 16 officer adopted or terminated a Rule 10b5-1(c) or non-Rule 10b5–1 trading arrangement during Q1 2025 - No director or Section 16 officer adopted or terminated a Rule 10b5-1(c) or non-Rule 10b5–1 trading arrangement during Q1 2025[193] ITEM 6. EXHIBITS This section lists the exhibits filed with the Form 10-Q, including the Restated Certificate of Incorporation, By-laws, CEO and CFO certifications, and Inline XBRL documents - Exhibits include the Restated Certificate of Incorporation, By-laws, CEO and CFO certifications (Rule 13a-14(a)/15d-14(a) and 18 U.S.C. 1350), and Inline XBRL documents[198]